R&Q recently announced the first acquisition by its new joint venture with OBRA Capital. OBRA, which recently changed its name from Vida Capital, holds a 9% stake in R&Q. With this transaction, R&Q taps into a potentially new distribution channel represented by an emerging trend identified by insurance industry research.
This trend sees large industrial (non-insurance) groups increasingly seek ways to achieve finality in respect of their long-tail liabilities that relate to worker compensation claims for exposure to asbestos, silica, foam etc. Although these are non-insurance liabilities are unregulated, they still require liability management expertise such as R&Q provides.
Furthermore, in December 2022 R&Q Accredited approved partnerships with seven new programs which will begin writing business over the course of Q1 23. Anticipated total Gross Written Premium (GWP) is c US$130m over next 12-15 months.
We have adjusted long-term forecasts to reflect the above, but not yet any potential adverse development on retained legacy reserves in FY 2022. Nor have we yet assessed the impact of moving to US GAAP in FY 2023, beyond replacing day-one gains with reserve releases. Overall, we believe investors should be encouraged by operational progress which also supports our move away from a sum-of-the-parts valuation to an earnings multiple / dividend yield basis.
Our Fair Value per share now stands at 155p.
